Apple CEO Tim Cook, left, visits the iPhone production line at the Foxconn Technology Group facility in Zhengzhou, Henan Province, China. [via Bloomberg]

Last week’s news that Foxconn will be moving some of its production to the U.S. renewed discussion of the so-called “reshoring” of manufacturing back to the states. America’s manufacturing sector has been growing for years. According to new research from the Boston Consulting Group:

Manufactured exports—a bright spot of the U.S. economy in recent years—are set to surge. Combined with jobs created as a result of reshoring, higher US exports could add 2.5 million to 5 million jobs by the end of the decade, as manufacturers shift production from leading European countries and Japan to take advantage of substantially lower costs in the U.S.

What reshoring means for makers entering the marketplace remains to be seen. Foxconn, manufacturer of the iPhone and other Apple products, is for big players, not small volume makers graduating from the garage. The conventional route for makers looking to scale up is to head to China where they can find an appropriately sized manufacturer that will make their products cheaper than they could in the U.S.

But shouldn’t declining US production costs benefit makers and as well as the manufacturing heavies? Industry watcher and MAKE contributor Travis Good is skeptical. But, he says:

The true opportunity comes when pro makers can tap into the idle cycles of the U.S.’s automated manufacturing capacity. As a small example, Ted Hall (ShopBot) is trying to make it possible for pro makers to slip their production needs into ShopBot fabricators’ shops with his 100,000 Garages. He’s doing it as a means of turning his customers’ idle capacity into opportunity but the notion can be generalized. We still produce more than anyone, but it’s automated and inaccessible via the Cloud.

Cloud-based manufacturing is a concept advocated by CloudFab founder Nick Pinkston. He, too, doesn’t see much impact from Foxconn’s move, but down the road, that could change if more production moves to the U.S.

The long-term implications are more interesting: i.e. if the supply chain starts to migrate back to the states, then China’s advantage there is diminished as well. If you ever go to Shenzhen, there are electronics component places everywhere. That could happen here, too, and would cut a lot of costs for small companies.

There’s a value-add with products made in the U.S. because creators and designers can be more intimately involved in the manufacturing process and potentially ensure better quality, not to mention better labor conditions. Brooklyn Bakery founder Matthew Burnett says he switched to American manufacturing for his apparel company

“Domestic manufacturing is now the only way I like to operate,” he wrote on Maker Row’s blog. “It allows me to move fast with an idea and have the product in hand within a fraction of the time that it used to take me with foreign factories.”

In a well-received piece for Fast Company, Bruce Nussbaum details what he sees as the emergence of a homegrown “indie capitalism.”

“Indie capitalism,” he writes, “is local, not global, and cares about the community and jobs and says so right up front. Good things come from and are made locally by people you can see and know.”

Are you a maker headed to market? Where are you looking for a manufacturing partner?

Stett Holbrook is editor of the Bohemian, an alternative weekly in Santa Rosa, California. He is a former senior editor at Maker Media.

He is also the co-creator of Food Forward, a documentary TV series for PBS about the innovators and pioneers changing our food system.

tcnobot

came on! they are moving the production for the items that no one like any more (computers), tablets will surpass computers sales in a couple years, is just good PR for the US people in order to try to clean their name for tax cheats, suicides, etc from previous years. .

This is really interesting to us, because our company is launching a new tech product, ATOMS, and we’re right now vetting whether to manufacture in the US or China. It’s not clearly cheaper to manufacture in China, but we are having trouble finding manufacturers here that are as vertically integrated – where we can get PCB assemblies and final assembly done one roof. We should know by late January where we are going to build our product.

Arnold

It’s not clearly cheaper to manufacture in China?

Keep rubbing the lamp. The valuation genie will come out eventually and give you the answer.

Andrew Posmontier

The problem is, re-shoring is supposed to be American companies bringing their manufacturing back to the US, not Chinese companies moving here and beating us to our own markets. We need big American companies to join this trend as soon as possible so that we don’t lose what little competitive advantage we still have in the manufacturing industry.

http://gwkirsch.wordpress.com Gunther Kirsch

Agreed. Its a good concept to bring manufacturing to the US but if these are international companies we will likely see little affect in promoting US economic growth. Sure jobs will be created but when a US tax free international company is the one creating these jobs, they are the ones who wreak the profits, not american tax payers or workers. Also, FOXCONN is notorious for being cheap, stingy and giving their workers the bare minimum; the Walmart of the manufacturing world. In order to make a real difference in the manufacturing and fabrication market the US needs to start supporting new up and coming companies operating with US borders, companies like shapeways. Manufacturing needs to become available to MAKERS not huge corporations like APPLE, for this is already common practice. Its a long way until an SOC designer can send an independent design to a manufacturer and have a prototype at his home within a few weeks, I suppose its better than nothing though.

Great article! Its very exciting to see manufacturing moving in the right direction, I just hope it keeps moving; within us borders that is.

Rusty Shackleford

In theory this reshoring idea is good, but in practice it will not be as good because it will cost more to manufacture goods in the u.s. therefore by driving up the cost of the final retail product.

Jack Van Gossen

In reality, the additional labor costs in the US have largely been marginalized by advances in automation and technology. For example, the iPhone would have only cost $16 more to be made here than in China because of labor. It was made in China for the simple reason that there were no firms here in the US that could get the job done.

http://www.facebook.com/quevedin Lucas Fernández Seivane

Inditex (the biggest clothing corporation in the world, whose owner, Spanish Amacio Ortega, is the world’s 3rd richest) is, in another field, doing same thing for some months, moving close to its core market and factories (in that case Europe) to respond faster to trends (in this case, to fashion). That this is happening in electronics (not only in US, but also in Brazil) and in Industry (Aerospatial going to Mexico, for instance) is starting to deflate slightly this “world’s factory” ideal to a much more multipolar one (US-Canada-Mexico, Europe, Brazil and Mercosur, China and satellites, India and satellites). Nevertheless, China is a huge economy, and a very important one.

Much of the offshoring occurred because companies looked only at wages or prices and not total cost. The Reshoring Initiative’s free Total Cost of Ownership software helps corporations calculate the real P&L impact of reshoring or offshoring. Current research shows most companies can reshore about 25% of what they have offshored and improve their profitability.
About 10% of the approx. 500,000 manufacturing job growth since the low in January 2010 is due to reshoring. Based on the 309 published reshoring articles in our Reshoring Library http://www.reshorenow.org/resources/library.cfm, we calculate that at least 50,000 manufacturing jobs have been reshored.
I was one of the business experts in Pres. Obama’s Jan 11, 2012 Insourcing Forum. I emphasized, and the assembled executives supported, the need for companies to more consistently utilize TCO analysis instead of price variance in making their sourcing decisions.
You can reach me at [email protected] for help using our tools for sourcing decisions and when selling.